Without a doubt, the C-level management in every company are highly important to the business’ developments and growth. Employees will know their CEO, COO, CTO and so on at the drop of a hat. There is no question then that compensation needs to be matched to their relevant experience, skills and ability to move the company forward.
Do you know how much C-level roles should be compensated? Are senior management positions compensated with cash, equity, or both? Read on to find out.
Do you know your C-level management?
The C-suite or C-level management include top-level management positions in a company. You will be familiar with terms like CEO, COO, and CFO, down to more niche positions like CKO (Chief Knowledge Officer) and CGO (Chief Green Officer). The executives make key strategic decisions that influence the business development holistically. An interesting note by Harvard Business Review revealed that once people reach C-suite level, leadership skills and a strong grasp of business fundamentals start to matter more than technical expertise.
The CEO of your company, takes charge of management and administrative direction of the company. At the top of the chain, they will drive the purpose, vision and mission. Complimentary to the CEO is the CTO role, or chief technology officer, who oversees information systems that the company uses. The CTO will drive technological strategy to improve the final product.
How are they being compensated across SEA?
The Southeast Asia Tech Talent Report by Monk’s Hill Ventures and Glints, released in March (2021), contains key information about compensation across all types of tech roles within SEA.
Within C-level roles, the median CTO base salary was higher than CEO salary. The report suggests that CEOs may be willing to take a pay cut in favour of their technical counterpart. In the same vein, CTOs largely own less equity and hence less stake in the company, compared to CEOs.
For startups in earlier stages of funding (0-$5M), CEOs compensation ranged between $1,000 to $7,300 per month. The median came in at $2,600.
Cash is still king, but equity is becoming more popular
If you want to hire and retain experienced talent especially within the C-level suite, equity may be a good way to attract these key players in the company. Founders may use equity to incentivise employees when faced with a salary cut, which is not an uncommon sight for startups. Equity gives future opportunities for bigger compensation when companies are sold or go public.
Hence, allocating an appropriate amount of equity can be a challenge. It depends on a range of factors, such as seniority, skills, and employee badge number.
The SEA Talent Report found that there is a spread in equity ownership, the highest for CEOs at the earliest stages of the company. It gradually shrinks over time with increased funding. CEOs at the $0-5M stage own between 15%-100% of the company’s equity. Beyond $50M in funding, equity ownership dilutes to 6% for CEOs.
Meanwhile, CTOs can own anywhere from 2% to 33% in the company, depending on capital raised. At $5-10M, CTOs surveyed owned between 9% to 21% of the company. Though not as high as a CEO’s share of equity, it is considered sizable ownership in the company. It also illustrates the importance of the role in a tech startup. As companies raise more funding, shares can be divested to new investors who join the cap table in later rounds.
If you found this excerpt useful, find out about compensation, equity and more by downloading the full report HERE – available for free.